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New city policy sets fees developers must pay for removing metered parking spaces

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Some of the most highly sought parking spots in downtown Ann Arbor are the limited number of on-street metered spaces on this block of Main Street between Liberty and William.
(Ryan Stanton | The Ann Arbor News)

The next time anyone brings forward a development proposal in downtown Ann Arbor that involves removing any on-street metered parking spots, they're going to pay for it.

The Ann Arbor City Council took action this week to establish a new policy for when developments take away on-street public parking spaces that bring in revenue to the city and the Downtown Development Authority.

The resolution worked out by council members Monday night establishes two separate fees that developers must pay for each space that's removed — $45,000 to eventually re-create the space elsewhere, plus 10 years worth of lost revenue from the space.

Over the past several years, more than 200 on-street metered spaces have been removed, but up until now no official policy or strategy existed for addressing that, said DDA Executive Director Susan Pollay.

Many spaces were removed to accommodate private development, Pollay said, while others were removed to accommodate changes that benefit the broader public.

At present time, Pollay said, the DDA estimates the total cost to design and construct an above-ground parking structure space is $40,000, and $55,000 for an underground parking space. Thus the DDA recommended that the city start charging developers a fee of $45,000 per space when developments or projects not initiated by the city or DDA lead to the permanent removal of on-street parking meter spaces.

Council Member Christopher Taylor, D-3rd Ward, brought forward a resolution Monday night to make that an official policy and won unanimous support from his colleagues. Council Members Mike Anglin and Sabra Briere were absent.

"It acknowledges parking spaces within the system are a finite resource," Taylor said of the new policy. "And it asks that a developer who wishes to have a parking space removed pay for that space — pay for the re-creation of that space elsewhere."

Council Member Sally Hart Petersen, D-2nd Ward, said it struck her that the city also should be trying to recoup lost annual revenue associated with each space, not just charging a flat $45,000 fee to create a new space elsewhere.

"The revenue loss to the parking system from the loss of each parking meter is also a very important concern given that parking system revenues are needed by the city to provide vital services to its citizens," Petersen said.

City officials say they place high value on on-street parking spaces like these ones on Washington Street.Ryan Stanton | The Ann Arbor News

Petersen successfully pushed through an amendment that adds a fee equal to 10 years worth of parking revenues for each space being removed.

The DDA collects roughly $2,000 a year in gross revenue on average per metered parking space, and about $1,347 in net revenue after subtracting associated expenses, including the transfer of 17 percent of revenues to the city.

Through a long-term agreement the city has with the DDA, 17 percent of parking revenues go to the city's general fund, and Petersen said the same should apply with the 10-year fee.

Council Member Sumi Kailasapathy, D-1st Ward, successfully pushed through an amendment that states monies received by the DDA through the flat $45,000 fee should be accounted for as restricted funds and used only for parking system capital projects, while the other fee based on 10 years of parking revenues should be accounted for as parking revenue received in the ordinary course of business.

Taylor said the changes proposed by Petersen and Kailasapathy and accepted by the rest of council were both excellent ideas.

The policy also states that the fees cannot be waived or offset by relocating parking meters to any other location in the city public right-of-way, unless such meters are located in the right-of-way associated with the development or project.

Council Member Jane Lumm, an independent from the 2nd Ward, said there's no question that on-street parking meter spaces have significant value.

"They are the prime spots in the dense downtown area," she said. "They provide the necessary accessibility for many seniors and those with disabilities who can't walk long distances, and I also agree that reducing the number of on-street parking spaces adversely impacts the perceived accessibility and attractiveness of downtown."

Noting that more than 200 on-street metered parking spaces have been removed over the years, Lumm said that's more than $400,000 in lost annual revenue given that each space brings in roughly $2,000 a year in revenue.

"So it does really add up," she said. "Given all of that, it certainly makes sense to formally recognize the value and for us to adopt a policy."

Records show the DDA brought in more than $4.4 million in gross revenue from roughly 2,200 metered parking spaces last fiscal year, and about $3 million in net revenue after expenses that include payment to the city.